South East Water will pay £30.5m after a series of supply interruptions, customer failings and for breaching its licence, the regulator Ofwat has said.
The watchdog said the redress package concluded three investigations into the supplier and included a previously proposed £22m fine for water supply failures between 2020 and 2023 affecting more than 286,000 people.
Ofwat launched a second investigation at the start of this year after further supply interruptions in Tunbridge Wells and across Kent and Sussex between November and January, which left up to 70,000 homes without water.
Third investigation over credit rating downgrade
The third investigation followed the downgrading of South East Water's credit rating by Moody's in May, which meant the company was in breach of its licence condition.
Ofwat will appoint an independent monitor to review South East Water's performance improvement plan and wider turnaround efforts.
Helen Campbell, the executive director for delivery at Ofwat, said: "South East Water must now focus on what matters most – its customers. These failures have caused real disruption and hardship for residents and businesses across many years, and supply interruptions of this scale have happened far too often."
"This package is the first step towards full accountability and to improving overall performance, and we welcome the company's engagement to bring these cases to a conclusion. But the work doesn't stop today – South East Water needs to make meaningful, lasting changes to ensure customers can rely on the service they receive," she added.
Allocation of the fine
About half of the fine, £13m, will be ringfenced for fixing issues that caused the supply failures at South East Water. Ofwat said £1.5m would go towards a community fund to provide support for areas in Kent and Sussex that were affected by failures.
As part of the package, £5m will be provided for free water butts for households, and two separate £5m payments will be made for site storage and smart metering for non-household users, such as businesses and public sector sites.
Mike Martin, the MP for Tunbridge Wells, where 24,000 homes were without drinking water for two weeks last year owing to failures at the Pembury water treatment centre, said South East Water needed to "stop tinkering around the edges with remedial measures and start addressing the root of the problem."
"The whole fine – not just 40% of it – needs to be invested back into the network for critical infrastructure upgrades," he said. "If South East Water are serious about preventing the next inevitable outage, they would adopt my £50m investment plan into Pembury Treatment Works."
Context of Ofwat's enforcement actions
The ruling is the latest in a series of investigations by Ofwat, which has resulted in fines and enforcement packages worth more than £300m. The biggest penalty was for Thames Water in May last year over wastewater failures, with the watchdog charging the company £104m over environmental breaches involving sewage spills.
The future of Thames Water still remains uncertain, although its creditors have said they are willing to pursue their bid for the debt-laden company even if the next prime minister, Andy Burnham, brings it into temporary nationalisation.
Ofwat is still investigating some water companies, though last week it said it had decided to spare Severn Trent a fine despite "serious and unacceptable breaches" in its handling of wastewater and sewage. It found that Severn Trent, which supplies water to more than 8 million people across England and Wales, had breached its duties by failing to effectively provide drainage and deal with the contents of its sewers. However, it said that unlike many other water companies under investigation, Severn Trent proactively identified problems in its network and began dealing with them before a case was opened in July 2024.
